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My parents took out life insurance for $5,000 for each of them. They paid for a pre-need policy, I didn't realize it was "first-come, first served". In other words, the first to die would be able to use the benefits from the pre-need policy as well as the life insurance.


My mother passed away 3 years ago at the age of 83. The cost of her services came to a little over $11,000. My father was given a check for $2,000. After my mother passed it was up to me to handle their finances. When I looked through their bank statements, I found that my father was still paying for his policy. The policy states that the benefits he would receive would be the face value of the policy which is $5,000.


According to my calculations, he has paid more than the $5,000. I called the insurance company who said he would get the face value plus any additional funds he paid.


Have you heard of this before? My father is 92 years old. He is in a nursing home with Alzheimer's Disease. Funds are still coming out of his check by the insurance company.

Most whole life policies have two options. You earn interest and dividends, OR you can use the interest to buy paid up additions. The last one is what my husband chose for his life policy. It sounds like that may be what option your Dad chose. Whole life policies are usually paid up at age 95. Then, you don’t make payments anymore. Paid Up Additions increase the value of the policy. This is a good thing. Can you tell I retired from the insurance business??
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Reply to elaineSC
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Imho, RebeccaCP has given you the valid answer that you're looking for.
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Reply to Llamalover47
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I don't know if it's the same thing but my mother bought a $100,000 whole life policy where she was supposed to receive any "overage". Every year the payments kept going up with no end in sight. I took it to an insurance attorney and he found they had done something illegal. I would do the same. These types of policies should be outlawed. He filed a lawsuit and she got every penny back that she had put in (without interest).
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Reply to CarolPeaches
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Also check and see if at a certain age he out lives the life insurance policy. My dad turned 96 back in November, he was still carrying his government job life insurance and a VA life insurance policy from when he fought in WWII. He received a letter stating he had out lived the insurance policy and they were sending him a check for the policy value and funds he had paid above it. He was so excited. He placed it in a CD under his and my name with POD to my mom. He said this should cover both his and moms funerals. They bought a stone and had it put up at their gravesite when my grandma died 30 years ago. Only needs birth/death dates added.
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Reply to KaleyBug
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Life insurance legal professional here...

It sounds like he may have a policy that provides what we call "paid up additions". It's not unusual for me to review a policy with a low face value that pays several thousand more because of the paid up additions.

You can, if you have power of attorney and your father can't, ask the insurance company to provide you a policy summary. It will provide you with the face value, the additional funds, any loans or automatic premium loans (if a payment was missed, it can come out of the paid up additions), the total death benefit, and the current beneficiaries. This may be helpful to you for final expense planning, or if you need to apply for certain benefits, and your peace of mind about what he has been paying for all these years.
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Reply to RebeccaCP
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Yes I have. Some of the terms used by the insurance company include:
policy face value
paid up additional insurance
dividend accumulation
termination dividend
total death benefit
net death benefit
Those are usually paid on death. It can total up to several dollars more than just policy face amount.

And then there are the valuse if the policy is cashed out before death. which is a significant reduction in the amount.

The agent should have explained all of this to you. The calculations are dependent upon the insurance company and their language and the exact type of policy purchased.

This is what I collected when my Luz passed away. Which helped cover nearly all of the funeral expenses totally more than $13K. there were other expenses including the stone.
The funds coming out of his check should stop very soon. They will need a copy of the death certificate and I believe the over payments will be returned to his estate.
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Reply to OldSailor
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lyonsdal Jul 6, 2020
This was very helpful. The face value of the policy is $5K. He's already over by $3K. Thanks so much!!
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